What is consolidated net income for 2021?

a. $194,000

b. $197,500

c. $203,000

d. $238,000

On January 1, 2019, Pride Corporation purchased 90 percent of the outstanding voting shares of Star, Inc., for $540,000 cash. The acquisition-date fair value of the noncontrolling interest was $60,000.

At January 1, 2019, Star’s net assets had a total carrying amount of $420,000. Equipment (eight-year remaining life) was undervalued on Star’s financial records by $80,000. Any remaining excess fair value over book value was attributed to a customer list developed by Star (four-year remaining life), but not recorded on its books. Star recorded net income of $70,000 in 2019 and $80,000 in 2020. Each year since the acquisition, Star has declared a $20,000 dividend. At January 1, 2021, Pride’s retained earnings show a $250,000 balance.

Selected account balances for the two companies from their separate operations were as follows:

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Pride Star $498,000 350,000 $285,000 195,000 2021 Revenues 2021 Expenses